After missing out digital transactions target in the last couple of years, the government has come out with e-transactions target 40 billion, which is 10 billion more than set target in 2018-19, for FY 2020.
This time it has increased targets for private and public sector banks. Ministry of electronics and information technology (MeitY) has set transactions target for SBI and Paytm to around 7.7 billion and 5 billion respectively.
Other private banks such as HDFC and ICICI bank are asked to contribute around 2.5 billion and 2.8 billion transactions respectively, said an ET report.
The ministry has also reportedly asked regulatory bodies like the RBI, IRDAI and Sebi are set to come up with regulatory sandboxes to push digital payments. These targets were given before the elections. With the last ruling party coming to power again, the pace of work is said to be faster in regard to digital payment adoption.
However, last year the govt fell 13% short of meeting 30 billion e-transaction target. This was not the first time the government has missed its e-transactions. In 2017, it also fell short to meet its set target.
For FY20, MeitY is planning to get over Rs 3,000 crore from banks.
One of the major roadblocks in the way of widespread usage of digital payment is its limited reach out. The lack of financial literacy, regulatory requirements and absence of efficient tech infrastructure are said to be some of the major challenges in digital payment. Merchants payment are still not completely part of govt’s digital payment.
As per industry observers, digital transactions are still restricted to urban areas. Indian wallet firms also due to strict KYC mandate and data storage norm have witnessed drop in transaction volumes across sectors.
Currently, the modes of digital payments operation in the country include UPI, Aadhaar-enabled payment system (AEPS), digital wallets, IMPS and POS terminals.
In the last couple of year, acceptance of digital payment modes has grown considerably. After demonetisation, usage of Paytm and other wallets registered phenomenal growth. The digital payment landscape is poised to witness unprecedented growth with the arrival of new and global payment firms like Google Pay, WhatsApp Pay and PhonePe.
UPI, in the last one year, has seen mercurial growth and it continues to grow even on a higher base now. In March, it witnessed 800 million transactions.
RBI, in the vision document released this month, said to witness accelerated growth in individual retail electronic payment systems, both in terms of a number of transactions and increased availability.